Civil suits may be halted to boost criminal case in CalPERS scandal
06/26/2013 12:00 AM
06/27/2013 8:45 AM
Hoping to strengthen their case against the two men accused in the CalPERS influence-peddling scandal, federal prosecutors are trying to shut down a series of civil lawsuits involving the duo.
The unusual legal strategy, undertaken with the cooperation of CalPERS, the California attorney general and the U.S. Securities and Exchange Commission, is an attempt to make sure the civil lawsuits don't muddle the federal prosecution.
The coordinated effort is "a sure sign that federal prosecutors are committed to bringing these defendants to justice and sending them to prison," Philip Khinda, the Washington lawyer who investigated the scandal for California Public Employees' Retirement System, said in a prepared statement.
The move comes three months after a federal grand jury in San Francisco indicted Fred Buenrostro, CalPERS' former chief executive, and Alfred Villalobos, a marketing agent and former CalPERS board member who represented investment firms doing business with the pension fund.
The indictment accuses the two of forging a cluster of CalPERS documents so Villalobos could earn millions in fees from his Wall Street clients.
Long before the criminal charges were filed, Villalobos and Buenrostro became entangled in three civil lawsuits. Jerry Brown, then the California attorney general, filed a lawsuit charging that Villalobos bribed Buenrostro and others at CalPERS. The SEC sued them over the same alleged document forgeries cited in the criminal case. Villalobos himself sued CalPERS in Nevada state court, saying CalPERS interfered with his business relationships.
In the past week, federal prosecutors have sought to halt proceedings in each of those lawsuits. CalPERS, the SEC and Brown's successor, Kamala Harris, have joined with prosecutors in asking the judges to stop the lawsuits while the criminal charges are pending.
The reasoning: If the lawsuits go any further, Villalobos and Buenrostro's lawyers could get "premature access to witness statements and other information," Assistant U.S. Attorney Timothy Lucey said in a filing seeking to halt the SEC's lawsuit.
That could "harm the criminal case," he added.
Buenrostro's lawyer, William Portanova of Sacramento, said the move could bolster the prosecution's case. "That level of cooperation is both unusual and unsettling," he said.
Villalobos' lawyer, Bruce Funk of San Jose, couldn't be reached for comment.
State officials said they were more than willing to stop their cases for the time being. "It's important that both Villalobos and Buenrostro be brought to justice," said Lynda Gledhill, a spokeswoman for Harris.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.
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